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19 May 2015 456 views

Roger Gullidge explains how the right contract with a builder can help strengthen a practice refurbishment

Beginning any building project comes with a plethora of hurdles and hazards to watch out for. This is especially true for dental professionals when it comes to planning a new practice or renovating an old one. The first question often is: where do I start?

Contractual decisions

It has always been essential that, when beginning a building project, a dentist should sign a contract with their chosen builder. Until very recently, the contract of choice would have invariably been a Joint Contracts Tribunal (JCT).
This is a well-rehearsed, finely tuned document created for balance and fairness to both the contractor and client. It very clearly encompasses for each party what must be done, by when, by whom and for what price – and, as with many contracts, the real benefits only come to the forefront if there is a dispute.
A definitive aspect of a JCT is the strict adherence to procedure. A dentist may want the builder to change certain aspects of a project, but what a JCT does is state that there is a clear process of information that must be followed in order to do this. They cannot simply approach the builder themselves, but must go through a contract administrator. The dentist can potentially fall foul of the contract if they stray from this course.
Another element of a JCT to be aware of comes towards the end of a project, when seeking documentation of practical completion. This signifies that all the works in the contract have been carried out and that the defects liability period can begin.
This can only be achieved once the contract administrator is in receipt of all the certification manuals for the building’s mechanical and electrical infrastructure, thus indicating that the building can now be used for what it was designed for. This can be a disputable area, as what the builder believes is practically complete could be seen as a matter of perspective. The contract administrator, therefore, has the right to deny practical completion until issued with all the manuals. This can prove onerous for the dentist, who will be keen to attain their Care Quality Commission (CQC) inspection and sign-off, but cannot proceed until in receipt of building regulations and fire certification etc.

The defect period

Upon practical completion, there is a list drawn up of any defects in the building and these must be dealt with within the defect period. This is written into the contract and may be three months, six months or even a year.
When there is a problem within that period, there are three categories where the contractor must respond within certain time limits:
1. Emergency – must be responded to within 24 hours
2. Urgent – must be dealt with within seven calendar days
3. Non-urgent – the contractor has 31 days to take action.
Naturally, a good contractor will try and do everything as quickly as possible, but they don’t have to under a JCT.
In the past, contractors have found themselves at the wrong end of practical completion and defect liability, not receiving their final payment until considerable time after because the client was unhappy with a certain portion of the project. This is in spite of there being a retention clause in a JCT to cover defects.
Recently, however, there was a revision to the construction act that came into force in the latter part of 2013 and included JCTs.
The act enables contractors to be entitled to receive their entire application payment – irrespective of whether the figures are correct or agreed – if they have not received a payment certificate by the date prescribed in the contract.
In other words, if nothing was written in the contract about final payment dates, the dentist would have to pay the contractor within a set time. Under a JCT, this can be as little as five days after the interim valuation date, and 12 days after practical completion.
What this means is that a smart builder, that has a sharp quantity surveyor, can make the documentation complicated by adding in figures that weren’t previously there, putting pressure on the client to overpay. A dentist could spend the whole 12-day period trying to work through the numbers, and end up paying the entirety, even if it’s wrong.

Alternative contracts

This is where, in more recent circumstances, a JCT may no longer be the most suitable option. A client who chooses to take more time to look through the details of the application would be in opposition to the contract. If this were to go to court, many judges would now uphold the terms of a JCT, making it a pretty powerful weapon against the client.
Thus, after many years of JCT contracts seeming to be the strongest option for a dentist beginning a building project, it would now seem to be worth getting a new contract written – ideally, one that is not under the rules of a JCT and does not include such awkward timing aspects.
Of course, this may incur some additional cost; the dentist would need a solicitor to draw up the new contract, but it could well be a better means of dealing with a project in the future.
Certainly, there are benefits to the contractor in using a JCT, as it now appears strongly weighted towards them, but it has recently become harder and harder to see the benefits to a client.
The best way to ensure the dentist’s needs are suitably met, while getting the builder on board, is to write a separate contract where arbitration can be agreed.

Commitment

All in all, there are so many particulars and potential stumbling blocks involved when beginning building work on a dental practice, that it can seem overwhelming from the offset. An architectural design service will be able to help navigate the pitfalls of such an endeavour. If you are looking to build or refurbish your practice, clear consideration needs to be made in selecting the best contract available to you. Working with a specialist really could save you significant time, money and stress.

Roger Gullidge has more than 20 years’ experience in providing interior design and architecture services to the dental practice sector and beyond. Visit www.rogergullidgedesign.com for more information.